Life insurance policies are available in various forms. Although the amounts pertaining to death benefit might be the same yet their structure, term period, costs etc differ widely in the context of these policies:
The most common policy in life insurance is that of term life. The main aim of this type of policy is safeguarding your beneficiary/ies suffering from financial problems owing to your death. Under this policy coverage, you should only pay the face amount that offers protection for a limited term period. Here the term policies never put up cash values with maximum duration of thirty years. So, it is understandable that these policies are fruitful if you need protection for a limited term. Where this policy offers protection against each dollar you spend than permanent policies, the premiums continue to rise when you grow older.
Also known as permanent coverage, these insurance policies offer assured insurance coverage for whole life of an insurer. Whole life insurance policies possess an element of cash value growing to be deferred tax at an assured amount as per the contract till it (policy) is being surrendered. Since such policies cover an insurer’s entire life, they have higher premiums in comparison to the term life. Premiums herein therefore will balance up the insurer’s life that further guarantees death benefit to your beneficiary.
This type of insurance policy combines the features like traditional protection as well as savings of the whole life including the possible growth of the funds for investment. It comprises of 2 different elements:
The insurance company’s liability account what this account stands for which isn’t allotted to any individual policy.
It takes into account several investment funds in the portfolio of an insurance company which can be either of the money market fund, bond fund or even equity fund or amalgamation of the three.
This policy is also referred to as adjustable life or flexible premium. It is just a variant to the whole life. Same as whole life, this policy is a permanent contractual policy that offers benefits of cash value on the present rates of interest. Points where this contract differs from that of whole life are as under:
However, it also possesses a tax deferred element that can accumulate wealth with passage of time. Higher premiums you need to pay than term policies for life term coverage.Variable Universal Life
Here the death benefit might fall or rise as per underlying investments of the policies.
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